Turtle Creek – Case Study

Turtle Creek

$10.3 Million

HUD Tax Credit Pilot Program – Tax Exempt Bonds with 4% Tax Credits

The Real Estate
110 units; 100% Section 8. The property was originally funded through the HUD Section 202 program and refinanced in 2003.

The Client’s Objectives
Rehabilitation needs and increased utility costs prompted the nonprofit owner to seek recapitalization that would provide funding for capital improvements focused on energy efficiency and site enhancements. In addition, the owner sought to generate funds to continue its mission to develop new, affordable housing and to support increasing needs for social services for its aging resident population. However, interest rates were rapidly rising threatening project feasibility. In addition, the existing regulatory restrictions and Section 8 contract precluded the nonprofit from increasing rents and using project funds for purposes other than standard operating expenses/debt service.

The Financing
Rockport submitted a Mark-Up-to-Market Section 8 renewal and waiver request on behalf of the new identity-of-interest, nonprofit-controlled tax credit mortgagor. Within three weeks Rockport received HUD approval of the increased rents/unlimited distributions. This allowed the purchaser to support a new Section 223(f) Tax Credit Pilot Loan, one of the first such loans to be processed in the country, sufficient to complete all planned improvements, extend long-term affordability, provide sales proceeds to the nonprofit seller to carry on its mission, and generate on-going cash flow for the social service needs of the project residents.